TIDMPXEN
RNS Number : 7435J
Prospex Energy PLC
24 December 2020
Prospex Energy PLC / Index: AIM / Epic: PXEN / Sector: Oil and
Gas
24 December 2020
Prospex Energy PLC ('Prospex' or the 'Company')
El Romeral Approval Granted & Issue of CLN
Prospex Energy PLC, the AIM quoted investment company focused on
European gas and power projects, is pleased to announce, further to
previous notifications, that regulatory approval has been received
for the acquisition of a 49.9% interest in El Romeral, an
integrated gas production and power station operation in southern
Spain ('El Romeral' or the 'Project').
In addition, the Company announces the issue of a GBP 415,838.28
convertible loan note and associated warrants to new and certain
existing investors, along with certain members of the Board and
staff in settlement of deferred stipends and salaries as a result
of the COVID-19 pandemic.
El Romeral
Tarba Energia ('Tarba') has informed its shareholders that both
the Ministerial and Regional authorities sign-off has been received
for the transfer of El Romeral to the company. This represents the
final regulatory approval required for the acquisition of El
Romeral, which can now proceed to completion. Completion is now
expected on 31 January 2021. Prospex owns a 49.9% interest in
Tarba's B shares with its partner Warrego Energy Limited owning the
balance.
Existing gas and electricity production and significant low risk
development potential
El Romeral is an operational gas and power project which
includes three producing wells that supply gas, through its own
network, to a 100% project-owned 8.1 MW power station. El Romeral,
which is comprised of three production licences, has significant
development potential and holds two development locations and 11
very-low risk prospects with gross contingent and prospective gas
resources of 5Bcf and 90Bcf, respectively. There is the potential
to increase the number of generating days at the Project
(historically equivalent to five days per week) and in the
medium-term increase utilisation of the generation equipment
(current 22%) by increasing onsite gas production. When gas was not
a limiting factor, the power station regularly produced c. 60,000
Mwh per annum.
Next steps
Following completion of the acquisition, Tarba will assume the
day-to-day management and control of El Romeral and will look to
implement a number of short-term operational enhancements and
efficiencies. Whilst there is no committed work programme, Tarba's
medium-term target is to increase gas production and, in turn,
electricity generation at the Project's power plant towards its
nameplate capacity via the drilling of new wells targeting already
identified development locations / prospects. Tarba will also carry
out a review of existing wells to evaluate the potential to
undertake workovers to enhance recovery rates.
Convertible Loan Note and Warrants
The Company has raised GBP265,000 via the issue of unsecured
convertible loan notes ('CLN'), with denomination of GBP1, to new
and certain existing investors, the net proceeds of which will be
used for general working capital purposes.
The CLN will pay 10% interest per annum with the first six
monthly payment due in June 2021. The term of the CLN is 18 months
with capital repayment of unconverted amounts due on 30 June 2022.
The CLN grants the subscribers the right but not the obligation to
convert the loan, on notice, into new ordinary shares in the
Company each at 2.05 pence per share, which represents a 11%
premium to the latest closing price of an Ordinary Share on 23
December 2020. The Company can elect at any time to repay the CLNs
early in cash.
In addition, certain holders of the Company's 2018 unsecured
loan note have ('2018 Notes') have agreed to rollover the partial
capital repayment due in December 2020 into the CLN. Under the 2018
Notes instrument, holders are entitled to 1/4 of the outstanding
capital returned in December 2020. There is a total of GBP514,689
of 2018 Notes in issue and therefore a potential payment of
GBP128,672 to noteholders. However, holders of GBP112,588 (87%) of
the 2018 Notes have elected to roll into the CLN. Following this
roll and the December 2020 quarterly payment, the outstanding
amount of the 2018 Notes will stand at GBP386,016.76 (see
announcement of 12 October 2018 for further details of the 2018
Notes).
A further GBP38,250 of the CLN has been issued to certain
Directors and staff in settlement of deferred stipends and salaries
as a result of the COVID-19 pandemic.
A total of GBP 415,838.28 of the CLN has therefore been issued
to all the above subscribers, each of whom will also be issued with
44.4444 warrants ('the Warrants') for each GBP1 of the CLN
subscribed. A total of 18,481,694 Warrants have been issued to the
subscribers. Each Warrant confers to the subscriber the right to
acquire one Ordinary Share at 2.25p, a premium of 22 to the latest
closing price of the Ordinary Shares. Save for certain events
triggering an earlier expiry, including 5 consecutive days of the
ordinary shares closing above 3.375p the Warrants will expire in
December 2022. The subscriber group is made up of 13 individuals or
their pension funds, including certain Directors as detailed
below.
Directors Interest
The 2018 Notes are held by the following Directors in following
amounts:
Director Amount
Bill Smith GBP53,613.45
-------------
Richard Mays (and GBP53,613.45
family)
-------------
James Smith GBP26,806.73
-------------
Capital repayment due on 31 December 2020 and rollover into the
CLN:
Director Amount
Bill Smith GBP13,403.37
-------------
Richard Mays (and GBP13,403.37
family)
-------------
James Smith GBP6,701.69
-------------
The Directors interests in the CLN as a result of 2018 Notes
rollover into CLN and additional subscriptions:
Director Rollover Additional Total
Bill Smith GBP13,403.37 GBP13,500 GBP26,903.37
(1)
------------- ----------- -------------
Richard Mays (and GBP13,403.37 GBP0 GBP13,403.37
family)
------------- ----------- -------------
James Smith GBP6,701.69 GBP15,000 GBP21,701.69
(2)
------------- ----------- -------------
Notes:
1 in lieu of stipend
2 further subscription
Related Party Transaction
The issue of the CLN to Bill Smith, Richard Mays (and family)
and James Smith constitutes a related party transaction pursuant to
Rule 13 of the AIM Rules for Companies. Accordingly, Edward Dawson,
independent Director in relation to the issue of the CLN, having
consulted with the Company's Nominated Adviser, Strand Hanson
Limited, considers that the terms of the Directors' participation
in the CLN (with associated warrants) are fair and reasonable
insofar as the Company's shareholders are concerned.
Prospex non-executive Chairman, Bill Smith, said, "Ministerial
sign-off for the acquisition of El Romeral sees Prospex become an
integrated gas and power investment company. For EUR374,250 we have
acquired a 49.9% interest in a gas-to-power project that can
generate significant revenues from the 8.1MW power station and
which cost EUR10 million to construct. It was not only the
excellent value however that attracted us to El Romeral but also
the significant growth potential. Gross contingent and prospective
gas resources of 5Bcf and 90Bcf respectively at two development
locations and 11 prospects provide multiple low risk opportunities
to increase the volumes of gas supplied to the power station which,
when gas was not a limiting factor, regularly produced c. 60,000
Mwh per annum. Based on historic average prices revenue per Mwh,
this would equate to annual revenues of over EUR4.2 million.
"We are not the only ones to see El Romeral's potential, so too,
in our view, do the subscribers to the CLN. As well as the
advancement of El Romeral, in 2021 these subscribers along with our
existing shareholders can expect to see the commencement of
production at the Selva gas field on the Podere Gallina permit in
Italy at an initial rate of up to 150,000 scm/day. Together with El
Romeral, our annual gas production has the potential to reach
7,800,000 scm in 2021. This would translate into a material revenue
stream for the Company which we will look to reinvest into further
development activity across our existing asset base. With this in
mind, I look forward to providing further updates on our progress
in the year ahead."
Qualified Person sign off
Carlos Venturini, Fellow of the Geological Society of London,
Exploration Manager has reviewed and approved the technical
information contained within this press release in his capacity as
a qualified person, as required under the AIM Rules.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* *S * *
For further information visit www.prospexoilandgas.com or
contact the following:
Edward Dawson Prospex Energy PLC Tel: +44 (0) 20 3948
1619
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409
Ritchie Balmer 3494
Jack Botros
Colin Rowbury Novum Securities Limited Tel: +44 (0) 20 7399
Jon Belliss 9427
Duncan Vasey Peterhouse Corporate Finance Tel: +44 (0) 20 7469
0932
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236
Cosima Akerman 1177
Notes
Prospex Energy PLC is an AIM quoted investment company focussed
on high impact onshore and shallow offshore European opportunities
with short timelines to production. The Company's strategy is to
acquire undervalued projects with multiple, tangible value trigger
points that can be realised within 12 months of acquisition and
then applying low cost re-evaluation techniques to identify and
de-risk prospects.
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